Insurers behind Vic WorkSafe shambles

Files stacked in ramshackle piles so high they are a health risk and thousands of invoices hidden in locked cupboards as part of an elaborate multimillion-dollar rort – welcome to the back office of Victoria’s workers’ compensation insurance industry.

Victorian Ombudsman
George Brouwer
tabled a report in Parliament yesterday that blasted the conduct of several of the country’s biggest insurance companies.

In Victoria, approved agents provide a number of services in the state’s workplace insurance scheme, including the collection of premiums, claims and case management and injury prevention activities. In return they received $212.5 million from WorkSafe in total fees last year.

The six agents at the time of Mr Brouwer’s investigation, which was sparked by an increase in complaints from users, were Allianz, CGU, GIO,
QBE
, Gallager Bassett and Xchanging.

Mr Brouwer found poor record-keeping had resulted in rorting of the incentive scheme, payment delays for claimants and privacy breaches, and he recommended an overhaul of document handling in the sector.

A key finding was that the $30 million performance incentive system, which is largely based on the speed of processing payments, was open to rorting and had been exploited on one occasion by CGU.

In that case, CGU staff had hidden 10,000 invoices in a locked cupboard when they were received during 2010, distorting the speed with which they were processed. A CGU investigation, Mr Brouwer said, found “senior managers" were involved in the rorting and two staff were subsequently sacked.

CGU, the system’s largest agent, copped a $2.8 million fine (the maximum penalty under the act) and agreed to pay back $2.5 million in incentive payments.

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“This manipulation was able to occur because of inadequate record-keeping systems hindering WorkSafe’s monitoring of CGU," he said.

A CGU spokesman said the company had identified the breach and implemented “remedial action" to prevent the problem reoccurring.

“There was no impact on employers or injured workers as a result of this issue," he said.

Some company managers told the Ombudsman it was possible to destroy correspondence to avoid the clock starting on a performance measure.

Mr Brouwer’s investigators visited offices of all the providers and, with the exception of QBE and GIO, found unsatisfactory processes.

At Allianz, which was paid $42.7 million last financial year, the files were a health hazard.

“Stacks of files were observed on the floor and on top of the shelves. Files inspected by my officers were in a state of disorder. Files had loose ­documents, torn covers and were overfull," he said.

“The management of these files is unacceptable and creates a risk of documents being lost, destroyed or allocated to the wrong file. The private and often very personal information of injured workers being kept in such a state is of concern."

WorkSafe told the Ombudsman that it regarded the situation as ­“unacceptable" and accepted all of Mr Brouwer’s recommendations.

Allianz told the Ombudsman it would fix the issues, partly through moving premises, but declined to comment further yesterday.